Senate Republicans block U.S. debt-limit hike again

By David Morgan and Susan Cornwell

WASHINGTON (Reuters) -Senate Republicans blocked an attempt by President Joe Biden’s fellow Democrats on Tuesday to head off a potentially crippling U.S. credit default, raising questions about whether partisan tensions in Congress will threaten the nation’s economy.

With federal government funding due to expire on Thursday and borrowing authority set to run out on Oct. 18, Democrats who narrowly control both chambers of Congress are working to head off twin fiscal disasters while simultaneously trying to advance Biden’s ambitious legislative agenda.

So far, Republicans have prevented them from doing so.

Republican Senate Leader Mitch McConnell on Tuesday blocked a vote that would have suspended the nation’s $28.4 trillion debt limit. Senate Republicans a day earlier defeated legislation that would have raised the debt limit and extended government funding.

Lawmakers now have just three days to avert a possible government shutdown by midnight Thursday, the end of the current fiscal year. Failure to do so could result in furloughs for hundreds of thousands of federal workers in the middle of a public health crisis.

Democratic leaders in the House of Representatives and Senate said they would soon advance spending bills to head off a shutdown.

Fiscal brinkmanship has become a regular feature of U.S. politics thanks to ongoing partisan polarization.

The most recent government shutdown, occurring during the presidency of Biden’s Republican predecessor, Donald Trump, lasted 35 days before ending in January 2019.

A government shutdown or a default would be a setback for the Democrats, who ahead of next year’s congressional elections have portrayed themselves as the party of responsible government after Trump’s chaotic presidency.

Democrats are also struggling to unite behind two pillars of Biden’s domestic policy agenda: a $1 trillion infrastructure bill and a $3.5 trillion social spending package.


Treasury Secretary Janet Yellen told lawmakers that the government would run out of options to service the debt by Oct. 18. Republicans have refused to cooperate to raise the debt limit, saying they do not want to help Democrats spend more money. Democrats point out that much of the nation’s debt was incurred under Trump.

Senate Majority Leader Chuck Schumer proposed holding a vote to raise the debt limit that could pass with just the support of the chamber’s 48 Democrats and the two independents allied with them as long as Republicans agreed to allow the vote to occur.

“If Republicans really want to see the debt limit raised without providing a single vote, I’m prepared to hold that vote,” Schumer said on the Senate floor.

But McConnell blocked the vote, saying Democrats should fold the debt-ceiling increase into a $3.5 trillion spending bill that would expand the nation’s social safety net. Democrats have already set up special rules that would allow that package to pass the Senate without Republican support.

Democrats are still negotiating the size and content of that package. It could take several weeks to clear Congress and reach Biden’s desk, dangerously close to the debt-limit deadline.

Schumer called that approach a “non starter.”

Democrats had originally planned to handle the social-spending bill, championed by the party’s left wing, in tandem with a $1.1 trillion infrastructure package that has drawn bipartisan support. But they have scheduled a House vote on the infrastructure bill on Thursday even though the social-spending bill is still being negotiated.

Lawmakers on the party’s left insisted that Congress must first pass the social spending bill.

“We articulated this position more than three months ago, and today it is still unchanged,” Representative Pramila Jayapal, leader of the Congressional Progressive Caucus, said in a statement.

(Reporting by Richard Cowan, David Morgan and Susan Cornwell; Editing by Andy Sullivan, Will Dunham and Jonathan Oatis)